Here are the new changes in income tax you should note & lookout from April 1, 2018:
The most talked about, long-term capital gain indirect equity or equity mutual funds start from 1st April 2018. Any equity investments, if you sell after 1 year of holding, you will pay 10% plus surcharge as LTCG. This is subject to relaxation of 1 lakh per year per person. Also, the value to calculate purchase price will be 31 Jan 2018 (the Budget announcement date). This is “grandfathering” provision.
All equity mutual funds, if they declare dividends, they are bound to cut 10% plus surcharge as Dividend Distribution Tax. This is applicable for balanced funds too as they are categorized as equity funds. If your investment is in Dividend Option, you may do the following:
There is no change on personal income tax bracket. They remain same. But for Corporates where profit does not exceed Rs 250 crore, the new tax rate is 25%.
Standard Deduction returns
This year you do not have to keep medical bills or fuel bills as Transport Allowance & Medical Reimbursement have been merged with Standard Deduction of Rs 40,000. So earlier you were getting a relaxation of Rs 34,200 with hassles of claiming it through bills. Now automatically the amount of Rs 40K will be deducted from your gross total income.
Education Cess of 4% will be applicable instead of 3% earlier charged. A little burden increases here.
New changes in income tax for Senior Citizens will be implemented from April 1
Senior citizens (age of 60 and above) will have an additional deduction of Rs 40,000 on interest from bank deposits. No TDS till this amount of Rs 50K.
They will get higher exemption limits for medical insurance/medical related expenses of Rs 50,000 from Rs 30,000 earlier.
Increase in deduction limit for medical expenditure increased to Rs. 1 lakh under section 80DDB (treatment of specified disease)
Investment limit in Pradhan Mantri Vaya Vandana Yojana or PMVVY increased to Rs. 15 lakh from Rs. 7.5 lakh. It is also extended March 2020. A detail notification is expected soon.
You know the Capital Gain Bonds under Sec 54EC are used to save long-term capital gains. These bonds have 3-year lock-in. From April 1, 2018, on wards, the bonds will be for 5-year lock-in. An increase of 2 years for these low yield (current rate is 5.25%), taxable bonds is a real dampener.
If you are women and new to employment sector, you may ask your employer to reduce the contribution to Employee Provident Fund to 8% for first three years of employment. The rate for all is 12% of basic. This will increase your take-home amount.
Penalties have increased
In case you fail to fill ITR, the penalty has increased to Rs 500 per day from the previous Rs 100. The penalty of non adhering to notice has increased to Rs 1000. Do not miss filing the ITR for yourself and family members.
At present, an employee contributing to the NPS is allowed an exemption in respect of 40% of the total amount payable to him on the closure of his account or on his opting out.
This exemption is not available to non-employee subscribers. It is now extended the said benefit to all NPS subscribers. So if you are self-employed the liquidity under NPS has increased.
In case of single premium health insurance policies having the term of more than a year, Now you can avail deduction on a proportionate basis for the number of years for which the cover is provided. So you can go for a multiple year policy by availing discount and getting the proportionate
These new changes in income tax rules happen from April 1, as it is easy for the financial world to follow both in records and operationally.
Do make note of these Budget 2018 change that gets implemented from 1st April 2018.
Hope you liked this article on new changes in income tax for the year FY 2018-19. more
All equity mutual funds, if they declare dividends, they are bound to cut 10% plus surcharge as Dividend Distribution Tax. This is applicable for balanced funds too as they are categorized as equity funds. If your investment is in Dividend Option, you may do the following:
There is no change on personal income tax bracket. They remain same. But for Corporates where profit does not exceed Rs 250 crore, the new tax rate is 25%.
Standard Deduction returns
This year you do not have to keep medical bills or fuel bills as Transport Allowance & Medical Reimbursement have been merged with Standard Deduction of Rs 40,000. So earlier you were getting a relaxation of Rs 34,200 with hassles of claiming it through bills. Now automatically the amount of Rs 40K will be deducted from your gross total income.
Education Cess of 4% will be applicable instead of 3% earlier charged. A little burden increases here.
New changes in income tax for Senior Citizens will be implemented from April 1
Senior citizens (age of 60 and above) will have an additional deduction of Rs 40,000 on interest from bank deposits. No TDS till this amount of Rs 50K.
They will get higher exemption limits for medical insurance/medical related expenses of Rs 50,000 from Rs 30,000 earlier.
Increase in deduction limit for medical expenditure increased to Rs. 1 lakh under section 80DDB (treatment of specified disease)
Investment limit in Pradhan Mantri Vaya Vandana Yojana or PMVVY increased to Rs. 15 lakh from Rs. 7.5 lakh. It is also extended March 2020. A detail notification is expected soon.
You know the Capital Gain Bonds under Sec 54EC are used to save long-term capital gains. These bonds have 3-year lock-in. From April 1, 2018, on wards, the bonds will be for 5-year lock-in. An increase of 2 years for these low yield (current rate is 5.25%), taxable bonds is a real dampener.
If you are women and new to employment sector, you may ask your employer to reduce the contribution to Employee Provident Fund to 8% for first three years of employment. The rate for all is 12% of basic. This will increase your take-home amount.
Penalties have increased
In case you fail to fill ITR, the penalty has increased to Rs 500 per day from the previous Rs 100. The penalty of non adhering to notice has increased to Rs 1000. Do not miss filing the ITR for yourself and family members.
At present, an employee contributing to the NPS is allowed an exemption in respect of 40% of the total amount payable to him on the closure of his account or on his opting out.
This exemption is not available to non-employee subscribers. It is now extended the said benefit to all NPS subscribers. So if you are self-employed the liquidity under NPS has increased.
In case of single premium health insurance policies having the term of more than a year, Now you can avail deduction on a proportionate basis for the number of years for which the cover is provided. So you can go for a multiple year policy by availing discount and getting the proportionate
These new changes in income tax rules happen from April 1, as it is easy for the financial world to follow both in records and operationally.
Do make note of these Budget 2018 change that gets implemented from 1st April 2018.
Hope you liked this article on new changes in income tax for the year FY 2018-19. more
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